HUGOTON ROYALTY TRUST DECLARES NO NOVEMBER CASH DISTRIBUTION

Rhea-AI Summary

Hugoton Royalty Trust (HGTXU) announced no cash distribution to unitholders for November 2024 due to excess cost positions across all three Trust's conveyances. The Trust's cash reserve was reduced by $4,000 for expenses. Current month underlying sales volumes were 648,000 Mcf of gas at $2.68/Mcf and 12,000 Bbls of oil at $67.67/Bbl. XTO Energy reported development costs of $195,000, production expense of $1,950,000, and overhead of $961,000. Cumulative excess costs remain: Kansas ($1,241,000), Oklahoma ($1,794,000), and Wyoming ($7,333,000). Four non-operated wells in Major County, Oklahoma have incurred $10.4 million in development costs.

Positive

• Recovery of $252,000 in excess costs from Kansas properties

Negative

• No cash distribution to unitholders for November 2024
• Reduction in cash reserves by $4,000
• Decrease in gas sales volumes from 719,000 Mcf to 648,000 Mcf
• Decline in average gas price from $4.09 to $2.68 per Mcf
• Decline in oil sales from 24,000 to 12,000 Bbls
• Decline in oil price from $75.13 to $67.67 per Bbl
• Significant cumulative excess costs: $10.37 million across three territories
• High development costs of $10.4 million for four non-operated wells

DALLAS, Nov. 18, 2024 /PRNewswire/ --  Argent Trust Company, as Trustee of the Hugoton Royalty Trust (the "Trust") (OTCQB: HGTXU) announced today there would not be a cash distribution to the holders of its units of beneficial interest for November 2024 due to the excess cost positions on all three of the Trust's conveyances of net profits interests. The Trust's cash reserve was reduced by $4,000 for the payment of Trust expenses. To the extent net profits income is received in future months, the Trustee anticipates replenishing the cash reserve prior to declaring any future distributions to unitholders. Replenishment of the cash reserve may include any increase in the cash reserve total, as determined by the Trustee. The following table shows underlying gas and oil sales and average prices attributable to the net overriding royalty for both the current month and prior month. Underlying gas and oil sales volumes attributable to the current month were primarily produced in September.

		Underlying Sales
		Volumes (a)					Average Price
		Gas (Mcf)			Oil (Bbls)		Gas (per Mcf)		Oil (per Bbl)
Current Month Distribution		648,000			12,000		$2.68		$67.67
Prior Month Distribution			719,000		24,000		$4.09		$75.13

(a)	Sales volumes are recorded in the month the Trust receives the related net profits income. Because of this, sales volumes may fluctuate from month to month based on the timing of cash receipts.

XTO Energy has advised the Trustee that it has deducted development costs of $195,000, production expense of $1,950,000, and overhead of $961,000 in determining the royalty calculation for the Trust for the current month.

Prior Month Distribution
As previously disclosed, XTO Energy advised the Trustee that out of period plant product revenue for the Oklahoma Working Interest net profits interests contributed to a higher average gas price for the prior month. Excluding these out of period plant product revenues, the average gas price would have been $1.97 per Mcf for the prior month. This had no effect on the cash distribution in the current or prior month.

Excess Costs
XTO Energy has advised the Trustee that $252,000 of excess costs were recovered on properties underlying the Kansas net profits interests. However, after the partial recovery, there were no remaining proceeds from the properties underlying the Kansas net profits interests to be included in the current month's distribution. Underlying cumulative excess costs remaining on the Kansas net profits interests total $1,241,000, including accrued interest of $106,000.

XTO Energy has advised the Trustee that excess costs increased by $654,000 on properties underlying the Oklahoma net profits interests. Underlying cumulative excess costs remaining on the Oklahoma net profits interests total $1,794,000, including accrued interest of $372,000. 

XTO Energy has advised the Trustee that excess costs increased by $531,000 on properties underlying the Wyoming net profits interests. Underlying cumulative excess costs remaining on the Wyoming net profits interests total $7,333,000, including accrued interest of $329,000.

Development Costs
As previously disclosed, XTO Energy advised the Trustee that it elected to participate in the development of four non-operated wells in Major County, Oklahoma. As of the date hereof, $10.4 million underlying ($8.3 million net to the Trust) in development costs have been charged to the Trust for the four non-operated wells. Two wells were completed in second quarter 2023, the third was completed in fourth quarter 2023, and the fourth was completed in first quarter 2024. The Trustee and XTO Energy will continue to provide material updates on the four non-operated wells in subsequent communications.

For more information on the Trust, including the annual tax information, distribution amounts, and historical press releases, please visit our website at www.hgt-hugoton.com.

Statements made in this press release regarding future events or conditions are forward looking statements. Actual future results, including development costs and timing, and future net profits, could differ materially due to changes in natural gas and oil prices and other economic conditions affecting the gas and oil industry and other factors described in Part I, Item 1A of the Trust's Annual Report on Form 10-K for the year ended December 31, 2023.

 

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SOURCE Hugoton Royalty Trust

FAQ

Why did Hugoton Royalty Trust (HGTXU) suspend its November 2024 distribution?

HGTXU suspended its November 2024 distribution due to excess cost positions on all three of the Trust's conveyances of net profits interests and ongoing Trust expenses.

What are the current excess costs for HGTXU across its territories?

As of November 2024, HGTXU's excess costs are: Kansas ($1,241,000), Oklahoma ($1,794,000), and Wyoming ($7,333,000), totaling approximately $10.37 million including accrued interest.

How much did gas and oil prices decline for HGTXU in the latest report?

Gas prices declined from $4.09 to $2.68 per Mcf, and oil prices decreased from $75.13 to $67.67 per Bbl in the latest report.